This thread was created with the purpose of discussing the possibility and implementation of creating the shareholder interest group in order to prevent further destruction of shareholder value and allowing KBL to avoid a significant liability in the form of the $13M convertible note.
As a result of the actions of KBL management over the last few years, shareholder value has been reduced horrendously. Though some of the problems encountered by the company were out of the control of management, management is to blame for allowing the company to get into the position where those events were able to adversely affect it.
Consequently, our holdings have been diluted through numerous capital raisings and our share of any positive change for the company at this stage will now be minimal. Furthermore, given the present financial state of the company, it is likely that our holdings will be diluted further by February 2017 when the $13M convertible note falls due.
We, as shareholders have the ability to take control of the way this company is run and potentially avoid further significant dilution of our holdings due to repayment of the convertible note.
This can be achieved by forming a shareholder interest group with a voting interest of >50%. As a group we may then directly influence management regarding the running of the company as well as take action regarding the convertible note.
In the Quarterly Activities Report from 26.04.2016, the current MD stated the following:
The Company is currently working closely with the Convertible Note Trustee to best deal with the expiry of the $11.2M (issue value) in notes (ASX code KBLGA) in February 2017. Under the terms of the notes, they need to be repaid by this date, or alternatively, conversion is deemed to occur if a takeover occurs prior to the February expiry date. What this means is that under the terms of the notes, the 28.9M notes will be deemed to convert into 28.9M shares if an off-market bid, a market bid, scheme of arrangement, or offer or invitation is made to all holders of Ordinary Shares is made and the offeror has at least 50% of the voting power or the Directors issue a statement recommending that the bid, scheme or offer.
Without an alternative arrangement being made, given the current share price of the company, if a takeover was made and the above conditions were met, this could lead to a considerable loss by Noteholders.
If we are successful in forming a shareholder interest group, it is my understanding that we may be able to trigger the above described event which would result in the issue of only 29M shares rather than the billions that would be required otherwise. This would remove a significant liability without diluting our holdings and would be a breath of fresh air into the company.
Now I am not a financial expert, I am an engineer and hence am not familiar with the finer details of how to go about creating the shareholder interest group. However, I am sure many here have a financial background. My understanding is that we simply need to get a sufficient number of holders who in total will have a voting interest of greater than 50%. If we are unable to achieve this with our present holdings, we may be required to purchase additional shares on market.
So now the questions:
- Who sees any problems with the above described plan?
- What is the best way to implement this plan?
- Who is interested in this plan?
